Spotify Needs More Money, Gets Slammed By U2’s Manager

Spotify arrived in the U.S. with lots of promise. After overtaking Europe the streaming music was hyped as the next big thing we would all be using in short time. While Spotify’s popularity has grown since hitting the U.S. market, it has recieved stiff competition from other services like the ad-free Grooveshark and more recently, Google Music (check out Prefix's "Taking Bets on the Cloud" for a run down of streaming music services).

Now apparently the streaming service is looking for more financing according to Michael Robertson, owner of mp3.com. Robertson emailed a group of executives on PHO earlier today stating that "my sources say Spotify is seeking more capital." This is after a year, where Spotify raised a flush $100 million and just recently went over the 3 million paid-users threshold.

This news comes in the midst of further controversy spurred by a growing resistance to Spotify from bands and smaller labels. In November it was reported that over 200 labels, made up of mostly electronic music, bailed on Spotify. While today, U2’s manager, Paul McGuinness, stated the following:

“Spotify has yet to become popular with artists because artists don’t see the financial benefit of working with Spotify,” the manager continued. “That’s partly the fault of the labels, and the labels partly own Spotify. And there’s insufficient transparency”

According to McGuinness and others, due to the contracts Spotify has made with labels, and in part contracts artists have made with the labels as well, it becomes a bit of a guessing-game when payouts come in. This has caused damage with the artist community.

Undoubtedly this will be a story that will continue to unfold as we watch what is essentially becoming a “streaming music” war amongst a variety of different contenders.